Remarks by Treasury Secretary Tim Geithner at NanoMech Manufacturing Plant and Labs

Remarks by Treasury Secretary Tim Geithner at NanoMech Manufacturing Plant and Labs

Springdale, AR

As Prepared for Delivery

Thanks to Jim Phillips and Dr. Ajay Malshe. I admire what you have built.

And thanks to Congressman Steve Womack for welcoming me to Arkansas. A quick note about Steve. I had a chance to testify the other day before one of his Committees. And he was tough, but smart and civil and fair, and he was focused not on the politics of the moment, but on what works and what doesn't.

It is excellent to be out of Washington.

I had a chance this morning to meet with a group of business leaders from your community, and then to take a look at what NanoMech is creating and building here in America.

Why this state, this community, this company?

Across the United States, not just in Silicon Valley or the Research Triangle, despite the damage caused by this crisis, despite all the challenges we have as a nation, and despite stronger competition from around the world, American companies are designing and building the products of the future, demonstrating the fundamental dynamism and resilience of the American economy.

This community and this company can help Americans understand our strengths, help Americans appreciate what it is going to take to win the future, and help Americans be confident that we can meet that challenge.

Our most important economic policy challenge is to make sure that the United States of America is the best place on the planet to do business, the best place in the world to do what Dr. Ajay Malshe did—to transform an idea into a company, a company that provides the chance for an American family to earn a decent living, put their children through college, save for retirement.

To help make this possible, we need Washington to do a lot of things better.

We need a skilled, highly educated workforce.

We need to support cutting edge research and technology.

We need a fast and reliable transportation and communications network.

Innovate, educate, invest – these are the foundations of the American economic strategy.

And they require investments and reform in Washington.

Investments in education, innovation and infrastructure.

A financial system that will provide the capital and funding businesses need to grow.

Reforms to cut spending and deficits so that we can afford those investments.

A centerpiece of this strategy is to create stronger incentives for investment and innovation in the United States.

The President has proposed a permanent and more powerful tax credit for research and development. And we released a report today on the economic benefits of this kind of incentive in helping support more than $100 billion dollars in innovative research and nearly 1 million research workers in professions that pay a good salary. And most of these benefits will go to manufacturing companies.

This proposal should be part of a comprehensive reform of the corporate tax system to make American companies more competitive. Reform that eliminates loopholes and preferences, lowers the tax rate on investments in the United States, and replaces a complicated muck of temporary provisions, with a more powerful, but more targeted set of permanent incentives, like the R&E tax credit.

These incentives can help companies like NanoMech innovate and expand.

We have a lot of challenges ahead of us. Millions and millions of Americans are still looking for work, at risk of losing their homes, less confident about their future, struggling to provide for their families in the face of higher gas prices. And the rest of the world is getting better at things that had defined America's strengths.

But we are a very strong country, and we are getting stronger again.

As we dig out of this crisis and fix our budget deficits so that we are living within our means, we need to make sure we keep working to strengthen our ability to grow. We need to bring a relentless focus to making this country the best place on earth to create and build things, to start a company, to raise a family and educate your children, and to invest in the future.

This is the President's economic strategy. This is our responsibility. And I hope we can find a way to get Washington to work together to make that happen.​

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Secretary Geithner, Northwest Arkansas Business Leaders Discuss Efforts to Create Jobs, Spur Economic Growth and Boost US Competitiveness

Secretary Geithner, Northwest Arkansas Business Leaders Discuss Efforts to Create Jobs, Spur Economic Growth and Boost US Competitiveness

New Treasury Report Shows Research Tax Credit Will Leverage More Than $100 Billion in U.S. Private-Sector Research Over the Next 10 Years, Support More Than 1 Million Research Workers

WASHINGTON – Today, Secretary of the Treasury Tim Geithner visited Northwest Arkansas to meet with regional business leaders to discuss how government and the private sector can work together to out-innovate our competition, and to tour NanoMech – a small business that demonstrates how innovative research can spur economic growth and high-wage jobs. In conjunction with the visit, the Treasury Department released a new report today detailing the economic benefits of the Research and Experimentation (R&E) tax credit and the President's Fiscal Year 2012 Budget proposal to expand and simplify the credit and make it permanent.

"This Administration is committed to increasing our investment in innovation – investments that help create the high-tech, high-wage jobs that we need to remain the world's most advanced economy," Secretary Geithner said. "By helping to spur more research activity here at home, we can help drive the technological advancements that increase our productivity and improve the living standards of all Americans."

Secretary Geithner's visit was an opportunity to hear first-hand from leaders of Arkansas businesses – large and small – about their efforts to create the jobs of the 21^st century. The group discussed measures designed to encourage innovation, investment and hiring, including the Administration's proposal to expand the R&E tax credit and make it permanent. This tax credit has been extended on a temporary basis 14 times since its creation in 1981, often retroactively. This leaves businesses with uncertainty about whether the R&E tax credit will be available in the future, making it difficult to factor it into decisions to invest in long-term research projects that will not be completed prior to the credit's expiration. Making the R&E tax credit permanent will strengthen its incentive effect by providing certainty to businesses that the credit will be available for future research investments.

The President proposed making the R&E credit permanent in his Fiscal Year (FY) 2010 and 2011 budgets and extended the current credit through 2011 as part of the bipartisan tax agreement in December 2010. In addition to making it permanent, the President proposed last September to increase the total amount of the R&E tax credit by 20 percent and simplify it, making it easier and more attractive for businesses to claim it for their research investments. This proposal was subsequently included in the President's FY 2012 Budget.

A new Treasury report shows that the President's proposal to expand the R&E tax credit and make it permanent will leverage more than $100 billion in domestic private-sector research over the next 10 years. It will also support nearly 1 million research workers in the U.S. in professions that pay higher-than-average wages. The vast majority of research costs supported by the R&E credit are labor costs and much of the research that takes place in the United States is done by highly skilled employees in science and technology professions that pay more than 75 percent more than the average annual wage for all professions.

The full report on the R&E credit is available here.

Following his roundtable meeting with regional business leaders, Secretary Geithner visited the manufacturing plant and labs of NanoMech, an award-winning, innovative small business that uses nanotechnology to manufacture products with broad applications, including machining and manufacturing, lubrication and energy, and biomedical implant coatings.

Because the R&E credit was extended through 2011 as part of the bipartisan tax package, companies like NanoMech that increase their qualified research and development spending in 2011 can potentially benefit from the existing R&E credit. According to the Treasury report, in 2008, the most recent year for which data are available, nearly 70 percent of all R&E credits claimed went to corporations in the manufacturing sector such as NanoMech.

"With only 5 percent of the world's population, the United States must rely on our science and technology advantage to maintain global leadership and competitiveness through brilliant innovation," said NanoMech CEO Jim Phillips. "The Administration's plan to simplify and make Research and Experimentation tax credits permanent is critical and essential to providing support for U.S. companies of all sizes to continue creating technological breakthroughs that make our country the strongest financially and militarily in the world."

NanoMech and its workers also will benefit from a number of other Administration tax cuts and investment incentives in 2011. In particular, NanoMech plans to take advantage of the new business expensing proposal that the President signed as part of the tax package. The proposal will temporarily allow businesses to expense 100 percent of their investments through 2011, potentially generating more than $50 billion in additional investment in the United States in 2011, which will help fuel job creation.

Because of the expensing proposal, NanoMech will immediately be able to expense 100 percent of the millions of dollars of equipment investments it has planned for 2011, potentially accelerating hundreds of thousands of dollars in tax cuts. NanoMech has already ordered new equipment in 2011 to support advanced manufacturing – equipment which arrived in the last few weeks – and has additional equipment on order.​

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Remarks by Treasury Secretary Tim Geithner at the Access to Capital Conference

Remarks by Treasury Secretary Tim Geithner at the Access to Capital Conference

As Prepared for Delivery

Good morning. Welcome to Treasury. We're very pleased to have everyone here today for our Access to Capital Conference.

I'd like to thank some of the people who are working so hard to help small businesses succeed in today's tough environment. At the SBA, Administrator Karen Mills, whose leadership has been key to so many of the Administration's initiatives.

And here at Treasury, Assistant Secretary Mary Miller, who organized today's conference; Don Graves, who's in charge of our small business programs; Treasurer Rosie Rios; and many others.

At the SEC, OCC, and other regulators, our colleagues are thinking about ways that they can help remove burdens and channel credit to small businesses. And we're pleased to be joined by our colleagues from the White House, Gene Sperling and Aneesh Chopra.

Finally, I want to acknowledge the entrepreneurs and investors who have joined us here today. As we consider ways to help small businesses from here at Treasury and throughout the Administration, we're going to need your expertise and creativity.

We're here because the ability of entrepreneurs to access financing is essential to building a more competitive economy.

Today, we want to explore how we can help make that happen.

What are the barriers to accessing capital? Where can the government do more or help eliminate barriers and where should we stay out of the way? What can the private sector and the public sector both do to help small companies get access to the capital that they need to grow?

The financial crisis caused a great deal of damage to the capacity of innovators to access capital, and we can't promote innovation and investment in the United States unless we help these innovative companies get the funding they need to succeed.

Now, we moved quickly in face of the crisis to restart economic growth, to re-open markets for capital and credit, and to build a stronger financial system that supports growth and innovation.

Alongside the broad measures we took to stabilize the financial system and financial markets, we supported three types of policy measures to help small companies – both start-ups and existing small businesses.

First, tax cuts and incentives – over the past two years, the President has signed into law 17 different tax cuts for small businesses, including eliminating capital gains taxes on key small business investments and raising the amount small businesses can expense to $500,000 – making it easier for small businesses to invest and hire more workers.

Second, we've put significant resources into support for innovation, particularly in health care and clean energy. And in those industries, small companies are often the most innovative.

And third, we have developed several special credit programs, through and alongside SBA, including loan guarantees and capital investments to encourage lending – such as the Small Business Lending Fund – and support for state small business credit programs.

Under the State Small Business Credit Initiative, for example, we've already announced funding for three states – California, Michigan, and North Carolina. Last week, the SSBCI contribution to North Carolina leveraged private capital to produce the first loan under the program – to J&S Reel Logging in Raleigh. And today, we are announcing funding for three more states – Missouri, Connecticut, and Vermont – that is expected to spur $534 million or more in new small business lending.

This program presents a low cost to taxpayers with a high impact for small businesses: to obtain the federal funds, each state demonstrates how it can leverage every 1 dollar of public investment into 10 dollars of new lending. Our $1.5 billion funding commitment nationwide is expected to spur $15 billion or more in additional small business lending.

These policies are making a difference. The cost of borrowing and credit terms are improving. Equity markets are open.

But it's still a tough financing environment out there for small companies, and we want to draw more attention today to the challenges facing start-ups and high-growth companies.

Over the past two decades, our financial system has undergone a significant transformation, and the way small start-ups find financing at each stage of growth has been part of that change.

At the earliest stages of funding, small companies have become more reliant on angel investors, universities, or sector-specific investment shops.

And as these small companies find their footing, they are waiting longer than ever to go public – financing themselves instead through multiple rounds of private equity or venture capital.

The number of IPOs in the U.S., for example, has decreased during the last two decades. And even though IPOs have picked back up in the wake of the financial crisis, an increasing number of U.S. companies are going public in other countries, or even deciding to stay private and access different sources of funding.

So, we want to get a better feel from you for where we need to focus the attention of policy makers going forward.

I want you to tell us not just what we can do, but how we can do it, especially if the ideas can be implemented quickly and don't require significant investments of taxpayer dollars.

This conference provides an opportunity to convene policymakers and market participants to gain insight and make progress on removing the barriers that stand before small companies today. It's an opportunity to find solutions that run from the traditional – such as tax incentives and direct lending – to the innovative and alternative, such as creating a way to efficiently pool investments in small companies.

We face a complex set of challenges – challenges that don't just affect small companies but the broader economy and the nation as a whole.

Today's conference is one more step in our work to address these problems.

I'd now like to turn the podium over to Administrator Mills. ​

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